چکیده انگلیسی

Do stronger intellectual property rights spur inventive activity and foreign direct investment (FDI) in developing countries? What are the characteristics of industries where strengthening patent rights has the most favorable impact? In an attempt to answer these questions, this paper uses the 1986 Taiwanese patent reforms to examine the effects of strengthening patent rights in a developing economy. I find that the reforms encouraged R&D effort across industries. In addition, industries that were highly R&D intensive witnessed a marked increase in their patenting in the United States. The reforms also induced additional FDI.

مقدمه انگلیسی

There has long been a tension between developed and developing countries on intellectual property rights protection.1 Developed countries have encouraged or pressured developing countries to adopt stronger systems of intellectual property rights. Despite the obvious intent to help their own inventors to extract greater returns from their discoveries, artistic creations, brand-name capital, and the like, developed countries often contend that a strengthening of intellectual property rights protection would also benefit developing societies, stimulating more domestic production of inventions as well as attracting more foreign direct investment (FDI). However, developing countries have been less than enthusiastic in embracing such an argument because an increase in intellectual property rights protection may raise the cost of goods and services produced with technologies developed abroad, decreasing not only the rate of technological diffusion but also economic welfare.2 Consequently, there exists a stark divergence between developed and developing countries in their systems of intellectual property rights. As intellectual property plays an increasingly important role in the production of goods and services and as the volumes of international trade and investment continue to grow rapidly, the tension between developed and developing economies about these policies has escalated in recent years.
Given the resurgence in international debates on intellectual property rights, scholars such as Kortum and Lerner, 1999 and Sakakibara and Branstetter, 2001 have sought to investigate changes in the patent system as well as their effects. However, they focus on experiences in the United States and Japan respectively.3 As the contemporary policy debate centers on the advisability of strengthening intellectual property rights in developing countries, the changes in the patent systems of developed countries, or their economic circumstances more generally, may not be representative of conditions in less developed societies. A similar policy shift may, therefore, have a very different impact in a developing economy from that in a rich, advanced country.
I examine the effects of strengthening intellectual property rights in a developing economy. To what extent do stronger intellectual property rights spur inventive activity? What are the characteristics of industries in which strengthening intellectual property rights may have the most favorable impact on inventive activity? Will the strengthening of intellectual property rights induce more FDI?
I explore the 1986 Taiwanese patent reforms. Taiwan, under considerable pressure from the United States, made important changes to her patent system in 1986 that became effective in January 1987. The reforms were mainly centered on improving enforcement of patent rights, such as allowing patent holders to obtain much higher compensation through civil suits for infringement. The government also introduced a wide range of administrative measures to curb infringement. Moreover, the new law stipulated the creation of a special court, which would have exclusive jurisdiction over patent litigations. This policy shift, not only sudden but also mainly pushed by foreign governments, provides an unusual natural experiment that allows one to study the impact of strengthening patent protection in a developing country.
To gauge the impact of the reforms on inventive activity, I use patent statistics. Particularly I rely on patents awarded by the United States Patent and Trademark Office (USPTO) to residents of Taiwan. I also employ R&D spending. The use of the two types of measures helps separate the impact of stronger patent protection on the propensity to patent an invention from that on investment in inventive activity (a well known issue among those who rely on patent counts). An exploration into the number of USPTO patents awarded to Taiwanese inventors allows one to further alleviate the complication due to changes in the propensity to patent. Inventors may be more inclined to employ the new Taiwanese patent system for their creations, as the new law strengthened patent protection in Taiwan. A change in patenting of Taiwanese inventions in Taiwan may result from either a change in the propensity to patent in Taiwan, or a change in inventive activity, or both. Because Taiwanese inventors have aggressively sought patent protection in the United States and because there was no significant change in the United States patent system around the time when the reforms came into effect, patenting of Taiwanese inventions in the United States provides a better measure to gauge changes in inventive activity of Taiwanese inventors than patenting of Taiwanese inventions in Taiwan. In order to control for other economic activities that may influence R&D spending and patenting, I also collect data on exports and production of various Taiwanese manufacturing industries.
I find that the 1986 Taiwanese patent reforms stimulated R&D spending. Industries that were highly R&D intensive experienced an increase in their patenting in the United States. The favorable impact was most pronounced in the electronic and electrical industry. The reforms also appeared to have encouraged investment from abroad.
The positive effects of strengthening patent protection found in this paper differ from the results from prior work (Hall and Ziedonis, 2001 and Sakakibara and Branstetter, 2001) that shows little impact of an increase in patent protection on inventive activity in advanced economies.4 My results suggest that the effects of policy change in a developing country may be much stronger than for similar policy shifts in developed societies.

نتیجه گیری انگلیسی

As the General Agreement on Tariffs and Trade and the World Trade Organization (WTO) require member countries to accept and adhere to the 1993 Trade Related Intellectual Property Agreement, in recent years developing countries have been restructuring their patent regimes to bring them more in line with those in industrialized countries. The primary motivation of developed countries, such as the United States, that have pushed for the so-called harmonization of intellectual property regimes has no doubt been in their own material interests. However, leaders of this recent policy trend toward strengthening patent protection argue that regardless of the background to the institutional change, stronger patent protection stimulates domestic inventive activity in developing countries — if not enhance social welfare more generally. Developing countries have generally reacted skeptically but have not always been able to stand up to the outside pressures.
This paper has sought to improve our understanding of the impact of strengthening patent rights in a developing economy, by examining the effects of a change in the Taiwanese patent system, a change which was to a great extent compelled by pressure from the United States. The empirical evidence supports the idea that the 1986 Taiwanese patent reforms stimulated additional R&D spending in Taiwan. The new patent system also increased patenting in the United States by Taiwanese industries that generally made substantial investments in the generation of new technological knowledge, especially the electrical and electronic industry.44 In addition to the direct effects on domestic invention, there is evidence that the strengthening of patent rights induced more FDI in Taiwan.
Several policy implications can be drawn from these findings. First, a stricter patent regime may benefit at least some developing countries by spurring inventive activity and encouraging FDI. However, the benefits from strengthening patent rights appear to vary across industries. The impact of a similar policy change may thus vary greatly by country, given each country's different industrial composition. As patent rights are based on national laws, cooperative efforts by industrialized countries to harmonize patent protection around the world may not be successful unless developing countries can also benefit. In order to resolve the conflict between innovative economies and technology net-importing countries, institutions such as the WTO and the World Intellectual Property Organization may need to address the ability of developing countries to create new technical knowledge before persuading them to institute stronger patent regimes.